GM on collision course with Opel unions

General Motors was today heading for all-out war with unions on the continent after its shock decision late last night to scrap the sale of its European Vauxhall and Opel operations.

While the British workers mostly welcomed the sudden change in tack, politicians and unions in Germany were unified in their fury, accusing the American parent company of "completely unacceptable" behaviour.

Germany has spent months negotiating a package of vast taxpayer handouts in return for employment pledges to smooth through a sale of the business to the Magna car parts group.

But now GM is to keep the business, those deals are left in tatters.

German labour leader at GM, Klaus Franz, immediately tore up an agreement he had struck on behalf of workers agreeing to cost cuts worth hundreds of millions of euros.

He declared his organisation "will not give in to GM blackmail" in its future negotiations.

But GM Europe shot back that it would push through a restructuring plan to cut costs by 30%.

In what was taken as a thinly veiled warning, a spokesman said: "Failure to reach the needed restructuring would result in the operation becoming insolvent, an unnecessary and undesirable outcome for all involved."

In the UK, Tony Woodley, secretary general of Unite, repeated that he was "delighted" with the decision.

"It is fantastic news for the UK and right that GM does not break up its family. The problems for General Motors were rooted in the US, not in the UK, where our plants restructured themselves years ago, becoming the best and most efficient in Europe."

He added: "Far better to remain within the experienced GM group than be spun off to Magna, which simply does not have the expertise to run a global car company."

However, his convenor on the ground at Vauxhall's large Ellesmere Port factory took the opposite view, saying: "This creates more uncertainty over the future of our jobs."

Unite had managed to wrest a deal with the proposed buyer, Magna, to limit job losses to 600 people across the 5500-strong UK workforce, and all through voluntary redundancy.

Woodley said it would now start negotiating all over again with GM, which is bound to want to bring in its own cost-cutting and efficiency drive.

Opel issued a brief statement saying: "The GM board of directors' decision brings clarity for Opel/Vauxhall. We will actively support all parties to implement this board decision as quickly as possible in order to safeguard a successful future for Opel."

Car parts distributor Magna said it would continue to service the group.

German politicians queued up to voice their condemnation: "General Motors' behaviour shows the ugly face of turbo-capitalism. That is completely unacceptable," said Jürgen Rüttgers, leader of the state housing Opel's under-threat Bochum plant.

Half of Opel/Vauxhall's 50,000 staff work in Germany and the sale was seen as a crucial plank in Angela Merkel's re-election success last month.